Adobe Premiere is pretty good for editing movies, but its also quite expensive. Windows Movie Maker (included with WinME & WinXP) will allow you to "import" avi's but I think (not sure) you can only save them as .WMV.
Ofcoarse there are many others. Go to the bigger freeware / shareware sites and look under the catergory video editing or the likes.
Kind regards,
Willem Moolenaar